TD Research discusses the JPY tactical outlook and sees a scope for only limited upside in USD/JPY, while prefers to fade rallies in CHF/JPY.

"Our global macro pricing engine shows a chunky premium in safe havens like gold and CHF. Gold's the most expensive, running at a 3% premium. It's a touch smaller in CHF but still sits at 2%. The JPY is mostly trading where it should, suggesting there's probably not much more upside in USDJPY that is likely to stall ahead of the recent highs near 110. A reduction of the gold premium takes up back to the early November levels around 1514. On net, that probably makes CHF one of the best candidates in the G10 to fund against stabilization in sentiment. We like fading rallies in CHFJPY," TD adds.